Question

Williams Manufacturing uses scrap metal to produce various tools, such as drill bits, hammer heads, saw blades, and nails. The CEO has asked you to analyze the saw blades division to determine asset turnover for last quarter. You find that the saw blades division had an ROI of 30%, sales of $10.50 million, and operating profits of $1.050 million. What was the asset turnover rate for last quarter?

Answer 1

Answer:

3 times per year

Explanation:

ROI = Profit/Sales * Sales/Asset

30% = 1,050,000/10500000 * Asset Turnover

30% = 10% *  Asset Turnover

Asset Turnover = 30%/10%

Asset Turnover = 3 times per year